It's Shakeout Time in the Magazine Business

Magazines sprout `for-sale' stickers

Publication:
Chicago Sun-Times
Publish date:
May 17, 1990
Author:
Nancy Millman


It's shakeout time in the magazine business.

Debt-burdened publishers are paring down while other firms are seeking a bigger market share in specialized fields and jettisoning magazines that don't fit their niche. Additionally, entrepreneurial publishers, finding that the soft advertising climate is wrecking havoc on their start-up-to-break-even projections, need more capital or to sell out.

The announcement earlier this week that Woman's Day, one of the country's largest circulation magazines, was going on the auction block is related both to the debt situation of its U.S. parent company and to the national outlook for advertising growth.

Of the 100 top grossing magazines, 60 declined in ad sales in the first quarter, including Woman's Day, which showed a 22.1 percent drop. Most competitors of Woman's Day in the women's service category also showed significant drops, with Good Housekeeping and McCall's being exceptions.

Diamandis Communications, the New York subsidiary of Hachette SA, took on a heavy debt load in the late '80s when Peter Diamandis bought a group of special interest magazines from his former employer, CBS. Last year, the company also bought News America Publishing's stake in Elle magazine.

Also this week, the Southern Progress subsidiary of Time Warner said it was suspending publication of Southpoint magazine, after changing its management, name and editorial focus upon purchasing it a year ago. Previously, the independent regional magazine was called Southern, and focused on the arts, literature and culture.

Wilma Jordan, president and chief executive officer of the Jordan Group, an investment banking and consulting firm for the publishing business, said her company currently is involved in 12 transactions, all driven by the factors mentioned above.

"In the middle of 1989 no one predicted that ad sales would be down this year," Jordan said.

For the first quarter, sales of magazine ad pages were down 3.5 percent with revenue up 1.5 percent. Jordan predicts pages will be off 4 percent to 5 percent in 1990.

The industry trade group, Magazine Publishers of America, however, supports other forecasts that predict a 5 percent growth in magazine revenue for 1990.

The uncertain advertising climate gives rise to many industry rumors about publications that may be up for sale.

Rupert Murdoch's TV Guide and the new magazines Smart and Fame have been mentioned in publishing circles as looking for buyers, scenarios their owners deny.

Industry sources said News America had invited interested parties to examine the books at TV Guide, the primary property in the $3 billion deal Murdoch made in 1988 to acquire Triangle Publications. TV Guide, the country's biggest magazine in terms of ad revenues, sold 10.1 percent fewer pages in the first quarter than it did last year, for revenue of $86.6 million. A spokesperson for News America said TV Guide was not for sale.

Murdoch, however, did say Wednesday his company was selling Sportswear International, a fashion industry trade magazine, to Michael Belluomo, its former editor and publisher. The purchase also includes the title In Fashion, a publication Murdoch killed last year. Sportswear International "was not a good fit with our consumer publications," said Leslie Hinton, president of Murdoch Magazines.

Smart, a one-year-old men's magazine backed by publishing entrepreneur Owen Lipstein, "emphatically is not for sale," he said.

"It's the first of the new men's magazines. Everybody else is talking about it, we really did it. Two of the biggest publishers in the country are starting new men's magazines. I consider it flattery," Lipstein said.

As the owner of what he has renamed New American Magazines, Lipstein last year sold American Health, one of his original properties, and recently temporarily suspended publication of Psychology Today for financial reasons.

"The American Health sale created some uncertainty about the company in general," Lipstein said, as an explanation of the Smart rumors.

Steven A. Greenberg, publisher and principal owner of Fame, a glitzy Vanity Fair clone that is not yet two years old, said owning the magazine is "too much fun right now" to consider a sale.

"We just cracked a number of major advertisers for the first time," including American Express and Revlon, he said. Business is up 14 percent over last year, he said.

On the local front, Chicago Times publisher Todd Fandell said he is hoping to sign an agreement that would bring needed capital to his magazine, which was not able to publish the May/June issue for financial reasons.

In other news of the magazine world, Playboy named Chiat/Day/ Mojo to handle its $3 million trade advertising account, following the closing of the New York office of Keye/Donna/Pearlstein, its previous agency.

Also, Knapp Communications named former Chicagoan Raymond J. Sachs as general manager and senior vice president of Bon Appetit, succeeding Cleon "Bud" Knapp who has been acting general manager. Sachs, who worked at Young & Rubicam here, has been president of John Emmerling Inc., a New York ad agency specializing in magazine publishing.

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